Debt talks include benefits cutbacks

House Speaker John Boehner of Ohio listens at left as President Barack Obama speaks during a meeting with Congressional leadership to discuss the debt, Thursday, July 7, 2011, in the Cabinet Room of the White House in Washington.

WASHINGTON — Under an urgent deadline, President Barack Obama and congressional negotiators set their sights on the nation's tax system and cherished benefit programs Thursday in hopes of striking a budget deal to raise the nation's debt ceiling. Obama said the two sides were still far apart and called everyone back to the White House on Sunday.

The president met with the eight top Republican and Democratic congressional leaders for an hour and a half Thursday, hoping to bridge ideas held by the two sides — each considered untenable by the other. On Capitol Hill, Democrats appeared especially rattled that the discussions included proposals to cut spending for Social Security as well as Medicare and Medicaid.

High-level talks, after dragging on for weeks, have entered a suspenseful endgame. The shape of an agreement is still in doubt as the nation moves ever closer to an Aug. 2 deadline to raise the government's debt ceiling.

. Obama said Democrats and Republicans should be prepared to show their bottom-line demands when they return to the bargaining table for the rare Sunday session.

The negotiating stakes are high. Without a deal on deficit reduction, Republican leaders say they don't have enough GOP votes to increase the nation's borrowing authority, raising the danger of the first ever U.S. default on its debts when the current $14.3 trillion debt ceiling is tapped out.

"Everybody acknowledged that we have to get this done before the hard deadline of Aug. 2 to make sure that America does not default for the first time on its obligations," Obama said. "And everybody acknowledged that there's going to be pain involved politically on all sides."

That leaves little time to agree on 10-year deficit reductions of $2 trillion to $4 trillion.

The major clash centers on how to reduce spending on major entitlement programs such as Medicare, Medicaid and Social Security, all prized by Democrats, and on tax changes that would close loopholes and end certain corporate breaks. Republicans insist that any tax changes be used to lower rates on corporations and individuals.

Increasing the debt ceiling through the end of 2012 — a date favored by the White House — would require authorizing about $2.4 trillion in additional borrowing. Boehner has insisted on a 10-year deficit reduction figure that, at a minimum, matches the amount of additional borrowing. One aide to a lawmaker in Thursday's meeting said Obama made it clear he wouldn't sign a budget and debt agreement that didn't extend the debt ceiling until after the November 2012 presidential election.

In the meeting, Obama told the leaders that they faced three options — a small deficit reduction plan, a medium plan that would reduce deficits by $2 trillion over 10 years or a big agreement that would shoot for roughly $4 trillion in deficit reductions over the next decade. Obama indicated he preferred the largest number.

The negotiations are politically difficult for both parties.

Raising the debt ceiling is unpopular with voters, especially those who vote Republican, increasing concern among GOP lawmakers that they could be challenged by fellow Republicans in primaries across the country.

The big entitlement programs such as Social Security, Medicare and Medicaid have long been protected by Democrats in Congress.

Signaling a potential obstacle, House Democratic leader Nancy Pelosi said she and fellow Democratic lawmakers will oppose including cuts in Social Security or Medicare benefits in any package aimed at reducing huge federal deficits.

"We are not going to balance the budget on the backs of America's seniors," Pelosi said.

Popular Comments

This is smoke and mirrors. The Gov. has income (taxes) coming in every day
enough to pay the needed expenses to avoid default. What Obama is concerned
about is not having enough left over to fund his over the top spending. Once a
con always a con.

7:15 a.m. July 8, 2011

Top comment

carman

Wasatch Front, UT

We cannot continue to shift money from the young to the old. Older Americans
are the wealthiest demographic in the country, while young, working families are
the poorest. Yet these young families are supporting the elderly with Medicare
taxes,
More..